University departments will be allocated research funding based on how much they get in grants from business, under government plans.

The Research Assessment Exercise, where an academic's work is judged by their peers, would be replaced with a more figures-based system from 2009/10.

It would also look at the number of researchers in a department and the number of publications.

The government said the planned system would reduce "red tape".

'Metrics'

The RAE assesses the quality of research in UK universities and gives the biggest grants to the highest-rated departments.

The next RAE, in 2008, will be the last. Until then, it will run in tandem with an experimental "metrics" system, based on statistics.

It is intended that the metrics system will take over in 2009/10, especially for mathematical and scientific subjects.

Humanities and languages departments are expected to retain a greater element of peer review.

Higher Education Minister Bill Rammell said: "These proposals make clear that we remain committed to encouraging, identifying and rewarding research excellence wherever it is found in higher education.

This will allow us to have a thorough debate about what replaces the RAE in the longer term

Professor Drummond BoneUniversities UK

"The 2008 RAE should proceed largely as planned with a shadow metrics exercise and after 2008 it should be replaced with a new lighter touch system based largely on metrics.

"The principle of using information that is already routinely collected to assess research quality and allocate funding is, I believe, the right one.

"And these proposals pave the way for introducing a less burdensome system for research assessment and funding after the 2008 RAE."

Under the RAE, universities choose which staff to enter for assessment and their research is graded from a level 5* downwards.

Finances

The grade awarded makes a large difference to a department's finances.

The metrics system for subjects like science, technology, engineering, maths and medicine should be based "largely on external research income", the Department for Education and Skills said.

Universities UK, which represents vice-chancellors welcomed the retention of the 2008 RAE.

Its president, Professor Drummond Bone, said: "This will allow us to have a thorough debate about what replaces the RAE in the longer term, and we look forward to responding to the government's consultation document on options for a lighter touch system.

"Universities UK will discuss the consultation with our members and respond in full."

'Minimal bureaucracy'

The Conservatives said basing funding on metrics presented problems for humanities departments.

Shadow minister for higher education, Boris Johnson said: "There are real difficulties using metrics in many humanities disciplines and some element of peer review will surely remain essential. What we need is minimal bureaucracy and maximum common-sense.

"We should also remember that there are plenty of research subjects whose immediate economic benefits may well be difficult to measure but which make a much wider contribution to Britain.

"Funding research is not just about the economy, stupid. It's about civilisation."